10.17.17 Your morning briefing
The information you need to start your day, from PaymentsSource and around the Web:
Pushing up tulips: Much like JPMorgan CEO Jamie Dimon, Swift CEO Gottfried Leibbrandt is getting medieval when critiquing virtual currency. Speaking at this week's Sibos event on Toronto, Finextra reports Leibbrandt compared bitcoin to the Dutch Tulip bubble, a sudden rise and fall of tulip bulb prices that caused a financial panic in the 1630s and has become a favored metaphor among financial figures in modern times. Swift is in a battle with Ripple, a distributed ledger staple with its roots in virtual currency. Ripple is pushing its technology as an alternative to Swift. Leibbrandt took several shots at both Ripple and bitcoin during his speech on Toronto. Ripple is also holding a conference, called Swell, this week in Toronto; and Swift is building a system for using service level agreements to boost speed and transparency for cross-border payments.
WiFi troubles: The security that protects WiFi networks has a vulnerability that hackers can use to steal information, according to Sky News. This could include card numbers, passwords, chat messages, emails, photos and other content that transmits over WiFi, Sky reports, citing research from KU Leuven. KU Leuven calls the vulnerability "KRACK" (key reinstallation attack). The vulnerability can be patched, and KU Leuven has already notified Apple, Google, Microsoft and other manufacturers. The vulnerability may never be fixed for older phones and routers, according to Sky, which adds many manufacturers do not plug vulnerabilities in products they are not actively marketing. However, the vulnerability would require the attacker to be in range of the targeted WiFi network, and KRACK only affects that communication between the device and WiFi access point, limiting its impact.
Vlad's coin: Perhaps it's the introduction of Whoppers as currency in Russia, but the country has become increasingly interested in cryptocurrency. The government plans a state-issued cryptocurrency called CryptoRuble, reports Cointelegraph, citing Russian media reports that Vladimir Putin announced the move in a private meeting in Moscow. But the new currency will not be similar to cryptocurrencies elsewhere, which rely on anonymity and decentralization to appeal to users. Russia, which is moving to ban cryptocurrency exchanges, will exert control over CryptoRubles that could turn away people who are active in new currencies elsewhere. CryptoRubles will not be "minable," and will be under strict state control. Owners can exchange the currency for Rubles at any time, and users will be subject to a 13% sales tax if they cannot explain where they got the CryptoRubles.
Big fintech investor eyes Uber: SoftBank has become a major investor in new payments technology, pouring more than $1.4 billion into Paytm and nearly $2.5 billion into Flipkart. SoftBank is now close to taking a multibillion stake in Uber, reports TechCrunch, quoting Arianna Huffington, a member of Uber's board who has taken on more of a direct role as Uber's management reshuffles. SoftBank's investment in Uber could be announced within days and would involve the buyout of existing investors. It could also lead to consolidation in ridesharing, since SoftBank is making investments in the industry globally. If the industry were to consolidate around Uber as a primary brand, that could potentially boost the market for SoftBank's payment investments; and for financial services companies that have partnered with Uber, such as American Express.
From the Web
To change how you use money, Open Banking must break banks
Wired | Mon Oct 16, 2017 - Banking is boring. For most people this might seem instinctively true – in the United Kingdom it is an objective statement of fact. Here, five big banks – Barclays, HSBC, Lloyds TSB, Santander and Natwest – control over 80 percent of the current account market, offering opaque variations on near-identical products. People pick a bank more or less at random (parents bank there; they have a branch nearby; they gave me a free young person’s railcard), then, once they’ve chosen, stick with it for life. Since 2013, only 3.5 million of an estimated 70 million UK account holders have changed bank. Now, this is about to change. In August 2016, the Competition and Markets Authority (CMA) issued a ruling ordering the nine biggest UK banks to allow licensed startups direct access to their data, right down to the level of current account transactions. Account holders must approve any exchange. If they do, then the data lying dormant in bank accounts – electricity bills; mortgage payments; weekly spend on cappuccinos – will become as easy to exploit as personal details online.
Spanish bank launches money-transfer app focused initially on US-Mexico remittances
TechCrunch | Mon Oct 16, 2017 - BBVA, Spain’s second-largest bank that snatched up mobile banking startup Simple for $117 million back in 2014, is now entering the mobile money transfer business with today’s launch of a new app called Tuyyo. The app, which is available on both iOS and Android, is focused on the $73 billion annual market for remittances to Latin America and the Caribbean from the U.S. However, the service is initially launching with money transfers from the U.S. to Mexico, where the average amount sent by U.S. workers is about $1,900 per year, says BBVA. It also notes that the U.S. to Mexico corridor sees over $27 billion flowing between the countries annually, making it one of the world’s largest. Tuyyo (whose name spelled out as “tu y yo” would mean “you and I” in English), will later roll out to the rest of Latin America, following its pilot testing phase.
Justices to Decide on Forcing Technology Firms to Provide Data Held Abroad
The New York Times | Mon Oct 16, 2017 - The Supreme Court on Monday agreed to decide whether federal prosecutors can force technology companies to turn over data stored outside the United States. Disputes between leading technology companies and the Justice Department have become increasingly common, and the new case will give the Supreme Court an opportunity to weigh in on the clash between the demands of law enforcement and the companies’ desire to shield the information they collect to protect their customers’ privacy. The case, United States v. Microsoft, No. 17-2, arose from a federal drug investigation. Prosecutors sought the emails of a suspect that were stored in a Microsoft data center in Dublin. They said they were entitled to the emails because Microsoft is based in the United States. A federal magistrate judge in New York in 2013 granted the government’s request to issue a warrant for the data under a 1986 federal law, the Stored Communications Act. Microsoft challenged the warrant in 2014, arguing that prosecutors could not force it to hand over its customer’s emails stored abroad. A three-judge panel of the United States Court of Appeals for the Second Circuit, in Manhattan, ruled that the warrant in the case could not be used to obtain evidence beyond the nation’s borders because the 1986 law did not apply extraterritorially. In a concurring opinion, Judge Gerard E. Lynch said the question was a close one, and he urged Congress to revise the 1986 law, which he said was badly outdated.
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